Bank Rates vs Tourist Rates: Why You're Always Paying More

The hidden markup banks and bureaux de change add \u2014 and how to spot the real mid-market rate.

There isn't one exchange rate — there are several

Open three apps and you'll see three different EUR/USD rates. None of them are wrong. They're each priced for a different audience.

• The interbank rate is what banks charge each other. You'll never get it.
• The mid-market rate is the midpoint between buy and sell on the wholesale market. This is the "real" rate quoted on Google or XE.
• The retail rate is what you, the customer, actually receive — always worse than mid-market.

The gap between mid-market and retail is the markup. It's usually invisible.

How banks build the markup

Most banks charge you in two layers:

1. A flat fee (often $0–$30 depending on the service).
2. An exchange-rate margin (typically 2%–4% for major currencies, more for exotic ones).

A bank can advertise "no fees" and still take 3% via the rate. On €5,000, that's €150 you'll never see itemized.

Tourist rates are even worse

Bureaux de change at airports, train stations, and tourist districts often run markups of 8%–15%. The "no commission" sign is technically true — the commission is just baked into the rate.

A real example: if mid-market EUR/USD is 1.0850, a typical airport kiosk might quote 1.020 for buying euros — a 5.9% markup before any "free" services.

How to spot the real markup in 30 seconds

1. Check the mid-market rate (your converter, Google).
2. Note the rate the provider is offering.
3. Calculate: *(mid-market − offered) ÷ mid-market × 100* = markup %.
4. Anything over 1% means you can do better.

Where to actually exchange money

Roughly in order of best to worst:

• Specialist online services (Wise, Revolut, OFX): 0.3%–0.7% markup.
• Online brokers: low markup but slower.
• Major banks (premium accounts): 1%–2%.
• Standard bank counters: 2%–4%.
• City-center bureaux de change: 3%–6%.
• Airport / hotel exchanges: 8%–15%.
• Dynamic currency conversion at the till: often 5%–8%.

Why the markup exists

Currency exchange isn't free for providers either — they take real risk holding inventory of one currency while customers want another. But the markups at retail counters far exceed those costs. The extra is pure margin.

Key takeaways

• The rate you see online is rarely the rate you'll get.
• "No commission" almost always means the markup is in the rate.
• Always compare the offered rate to the mid-market rate.
• Specialist services typically charge 5–10× less than airport kiosks.
• A 30-second check before exchanging can save you 5–10% on the spot.

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